Jewish Group Receives $1 Million Donation

West Boca — The Jewish Federation of South Palm Beach County received a $1 million pledge Thursday from a local businessman recently embroiled in a U.S. Securities and Exchange Commission case.

The donation from Sheldon Maschler, 58, of West Boca, is potentially the largest in the Federation's history. Maschler said his gift to the Federation was a way to give back to a Jewish community that sustained him throughout his childhood. Maschler's family left Poland and settled in Brooklyn, N.Y., shortly after World War II.

At a brief ceremony on the Federation campus west of Boca Raton, Maschler pledged to match every dollar, up to $1 million, that the Federation gets during its 2003 fund-raising drive. The donation will help fund the agency's numerous cultural, educational and social service programs, including aid to Israel.

"There was always the situation where I knew I'd give it back someday," Maschler said. He said he chose to donate now because of the escalating violence in Israel.

Federation officials said they welcomed Maschler's philanthropic gesture toward the agency, which has an annual budget of $50 million.

The Federation helps thousands of Jewish families locally and abroad. Its programs include scholarship funds, assistance for the mentally disabled and a relief aid program for victims of violence in Israel.

This month, the SEC filed civil charges against Maschler and several other brokers for taking part in an alleged fraud that earned millions of dollars in profits.

The defendants settled the claim Jan. 14 without denying the charges or admitting wrongdoing by paying a $70 million dollar penalty -- of which Maschler paid $29.2 million. They further agreed to SEC orders permanently barring them from associating with any broker or dealer.

The SEC complaint charged that Maschler and others affiliated with a New Jersey-based firm, Datek Securities Corp., abused the Nasdaq stock exchange's small-order trading system and concealed the profits from regulators through a maze of fictitious records and false reports. Maschler also was accused of using the accounts of unsuspecting shareholders to funnel illegally raised funds in a separate savings and loan scheme.

Maschler's son, Erik J. Maschler of Millburn, N.J., was among those charged in connection with the case. He paid a $5.9 million settlement to the SEC.

Erik Maschler said there was no correlation between his father's donation to the Federation and the recent settlement.

"We are very appreciative of Mr. Maschler for being so generous," said Steve Gelfand, the Federation's acting executive vice president.

Federation bylaws do not require a background check on donors who make substantial gifts, Gelfand said.

Maschler's dealings have been public knowledge for years.

In 1995, Maschler paid $675,000 in fines and was suspended from trading for one year for illegal practices, according to the National Association of Securities Dealers.

Jacob Frenkel, a former SEC enforcement lawyer who specializes in trading violations, said the $70 million settlement is one of the largest penalties paid in a lawsuit filed against individual brokers.

"The amount reflects the gravity of the allegations and breach of investor trust," Frenkel said. "This is the high-tech version of classic fraud for which the SEC has brought cases in the past against stock manipulators."

According to records, Maschler began Datek's daytrading business in the basement of his Staten Island home in 1987. The SEC alleged that Maschler's actions date to at least 1993.

After Wednesday's ceremony, Maschler was not available to comment on the SEC lawsuit. Nobody answered the phone at his Boca Raton residence. Maschler's lawyer, Ted Wells, could not be reached for comment.

Tal Abbady can be reached at tabbady@sun-sentinel.com or 561-243-6624.